Trott’s glass now half-empty
TAXPAYERS are bracing themselves for an increase in income tax rates after States finances were hit by more bad news.
Policy & Resources president Lyndon Trott yesterday dropped the biggest hint yet that next month’s 2025 Budget proposals could include a bid to raise the basic rate of income tax from 20p in the pound, after announcing a deterioration of at least £35m. in the States’ financial position this year.
This followed the publication of GDP estimates on Tuesday which indicated that Guernsey’s economy shrank by 2% in real terms last year.
‘My glass is generally full, if not overflowing.
‘Unfortunately, 2024 has seen some of this drained,’ said Deputy Trott.
‘2024 has highlighted the frailty of the States’ financial position. It has shown how little resilience we have. And the GDP numbers have underlined the need to have a sharp focus on our economy and its growth.’
Deputy Trott told the States Assembly that his committee’s preparations for the 2025 Budget, due out in 10 days’ time, had shown that it was ‘time to make some tough decisions’ to rebuild public finances and boost investment in infrastructure and economic growth.
The current States has repeatedly rejected major tax rises, throwing out numerous proposals for a new goods and services tax, two or three pence on the basic rate of income tax, and higher property rates.
Deputy Trott, who failed with a bid to put up income tax before he became P&R president last December, was asked by Scrutiny president Yvonne Burford whether the idea would be revived in his committee’s 2025 Budget, and he pointedly refused to rule it out.
‘I can’t tell Deputy Burford that because we are very closely controlled by Budget secrecy matters,’ he said.
‘But what I can say is that Deputy Burford is an intelligent woman and she has followed debate on these matters quite closely.
‘As a consequence of that, it sounds like she might be less surprised than she might otherwise be, should the Budget have that particular proposal.’
Deputy Trott had earlier revealed that original forecasts of an operating surplus of £11m. this year had now turned into an expected deficit of £24m., which would become £30m. if States trading companies’ losses were taken into account, and £46m. if social security income and expenditure was also included.
He also revealed that a recalculation made by an unnamed bank had revealed that it had paid about £15m. more tax than it should have since 2018, which would now have to be returned.
It was already known that a downturn in profit forecasts at the bank was likely to wipe nearly £16m. off budgeted income tax receipts this year.
